I finally got around to playing the demo...
The Graphics are simply jaw droping, easily better then anything I've seen on the console yet. The animation and the flash light effects when you go into darker areas... simply stunning.
The first mission scared the hell out of me. I was consentrating on all the little bug things when you pass under the land bridge. I was sort of walking backwards just admiring the scenery and I stopped moving so I turned around only to see the enormous bug monser getting ready to stab me
I almost shat myself seeing that larger then life on my HD projector.
Obviously the demo doesn't give us any taste of the storyline, and it's clear there are some tweaks to be worked out with the game play. Moving the character is a bit too tight and slow, while moving the crosshairs is a bit too loose.
If they worked out the UI issues (which really arn't THAT bad) and added a decent story (which if you watched the trailer it looks like there IS a really good story) this could turn out to be an awesome game. If anything it looks like a playable Starship Troopers.
As of right now it plays like a tech demo, and honestly I felt like I was playing a pre-rendered cut scene... I have no doubt GoW, CO3, or even Killzone 2 graphics are possible on this console. It's just a matter of seeing the developer make good use of it.